There were some very big announcements on the Government’s mini-budget, last week. From Income Tax and Corporation Tax cuts to IR35 Reform being scrapped, this was one of the most controversial statements we’ve seen in decades.

Here is a summary of what has been announced.

IR35

Maybe, the biggest surprise that day and most certainly a welcoming tune to the ears of many freelancers and contractors.

In short, the Government is repealing the IR35 reforms enacted in 2017 and 2021 and transferring back the responsibility of who decides whether a contract is inside or outside IR35, back to the contractor (e.g. away from the agency and end-client). This will also remove any financial liability or responsibility, if that decision was incorrect, back to the contractor. These changes should be coming into effect from April 2023.

Dividend Tax Rate

It was also announced that from April 2023, the Government will reverse the 1.25% increase in dividend tax, bringing the dividend tax rate back down 2021/22 levels.

Energy Bills

The Energy Bill Relief Scheme aims to cut wholesale energy prices for non-domestic customers by more than 50%, starting 1st October 2022 until 31st March 2023. The bill covers all private sector businesses, along with charities schools, hospitals and care homes.

More on our Energy Bill Relief Scheme guide.

Corporation Tax

Similar to the above, all plans to increase Corporation Tax rate to 25% from 1 April 2023, were reversed and the current rate will remain at 19%.

The Government’s previous plan was to tax profits over £250,000 at 25% and profits between £50,000 and £250,000 at the main rate reduced by a marginal relief. However, this has been scrapped.

More on our Corporation Tax guide.

Annual Investment Allowance (Capital Allowance)

Further business relief was introduced by reversing the decision to reduce Annual Investment Allowance to £200,000, from March 2023. It will now be set to £1 million permanently.

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New Investment Zones across the UK

These local zones will provide various tax benefits for businesses that decide to set up their operations in these areas.

Some of the tax benefits will include 100% business rates relief, Stamp Duty Land Tax discounts, zero rates of Employers NICs for new employees and more.

Income Tax

Starting from the next financial year on 6th April 2023, the basic Income Tax rate currently set to 20%, will be reduced to 19%.

Higher Tax Rate

Similarly and more controversially, the 45% Additional Rate bracket will be merged to a single, Higher rate; set to 40%. This will be formally issued on 6th April 2023.

Stump Duty

Starting 23rd September 2022, the 0% Stamp Duty Land Tax (STLD) threshold will increase from £125,000 to £250,000, for all types of residential property purchases made by Non-First Time Buyers.

The 0% of STLD for First Time Buyers, will also go up from £300,000 to £425,000.

National Insurance

Back in April 2022, the government introduced an increase in National Insurance Contributions (NIC) by 1.25%, both for employees and employers. From 6th November 2022, these rates will be reversed, which means that employee NIC will be reduced again to 12% and 2%  (from 13.25% and 3.25%) and Employers NIC will be reduced to 13.8% (from 15.05%).

Free VAT Scheme

Starting from tax year 2024/25, the Government will implement a Free VAT scheme on UK High-Street purchases made by non-residents. The scheme aims to revitalise the tourism industry along with the High-Street sector, by allowing UK visitors to export VAT-free goods in their personal baggage.